What will be price trend of two wheelers in India?

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Two wheeler (2W) prices in India have risen by 30 per cent to 40 per cent in last three years. And in next few months, it is unlikely that aspirant two-wheeler buyers in the country will get any relief from higher prices. Neither is there any chance that companies will claw back prices in coming years.

Home-grown auto manufacturer Bajaj Auto, ED, Rakesh Sharma, has said, “People will slowly adjust to new pricing. It has happened before. It will happen again.”

So, have higher prices impacted sale?

Not only 30-40 per cent price hike, but, other factors like damage caused to the economy due to Covid-19 pandemic, has led to sharp plunge in 2W sale over the past three- four years in the country. Three years ago, two-wheeler companies in India sold aggregate of 1.68 crore 2Ws in FY20. The domestic two-wheeler industry has not been able to touch that figure ever since then. In just concluded financial year 2022-23, two wheeler industry clocked sale of 1.59 crore 2Ws in the country (this was highest in any given financial year since FY20).

So, what will be 2W price trend going forward?

Sharma said, Bajaj Auto will not take any price hike at least in Q2 FY24. Whatever, commodity price hike took place since Covid-19 pandemic, it is fully adjusted in current price of 2Ws sold by the company.

TVS Motor, MD and CEO, K N Radhakrishnan, said, “TVS Motor will take any further round of price hike based on overall cost situation.”

Both these domestic two wheeler companies have said that raw material prices in the country have begun to cool-off. They will not be hiking prices at least in near future.

If two wheeler prices increase, its only going to be because of further hikes in commodity prices (which looks unlikely at the moment). And second reason can be residual passing on of impact of mandatory installation of OBD system in two wheelers in compliance with GoI’s BS6 Phase II emission norms, which had already kicked in the country from April 1, 2023. Because of mandatory installation of OBD system in vehicles, two wheelers companies had to increase prices. But, companies had decided to pass on price hike on to the consumers in parts to avoid putting sudden burden on consumers.

So, if any hike comes in price of 2Ws, then, it should be due to residual impact of OBD system installation that has not been passed on to the customers completely.